Question: QUESTION 1. Narstek Inc. has decided to issue a 4-year maturity, 15% coupon bonds with a total nominal value of 300 million t. The bonds

QUESTION 1. Narstek Inc. has decided to issue a 4-year maturity,

QUESTION 1. Narstek Inc. has decided to issue a 4-year maturity, 15% coupon bonds with a total nominal value of 300 million t. The bonds were sold at a 10% discount and floatation costs amounted to 5% of the total nominal value. The principal will be repaid in equal installments after the first year in which there will be no payment. The tax rate is 22%. Compute the cost of this bond issue. Try 18% first

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